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Friday, October 20, 2006

The Founders Dilemma

This is an introduction to a lecture I am giving this evening for a class of emerging entrepreneurs (Guys and Gals hope you are reading) it is the hardest thing for a founder to confront as his baby is growing up, it is learning to move from Doing to Leading , notice I missed the managing part that is a given. The baby you have worked so hard on giving birth to is now growing up from adolescence to maturity it means you have to grow as well , than can be hard and some founders don't make it, but if you want to succeed you need to learn to lead a commercial enterprise, Marketing and Sales now takes over from DOE and Taguchi, Breakeven to Profit; you have a responsibility morally and ethically to make good on the investment from all your stake and shareholders (Take a minute and list all the stake holders start with family and friends ? get my drift). It maybe that you can't don't want to take the company through that gate, then plan for succession and bring in someone who will complete the transition for you, and give the new man some time and support to settle in, and remember he is in charge now do not hamstring him from the beginning, let him get on with the task at hand.

But for the rest of you read on...comments welcome..

18 Symptoms of the Founder's Dilemma

1. Lots of talk but little action resulting in unfulfilled promises. As one founder said, "We knew what we needed to do differently. We just were not doing it."

2. Enormous frustration. Founders get very frustrated when execution lags behind vision. Sadly, what may be clear to associates often eludes the founders - that they are the cause of the limitations.

3. Limited executive team role. Executive team members often don't understand or appreciate the corporate vision and don't understand their corporate responsibility (e.g., trustee, stewardship role). Except for the CEO, everyone on the executive team has a silo or vertical slice of the firm to lead and manage. Every executive team member also has another larger "hat" to wear - one that requires a big picture, enterprise-wide view (like that of the CEO, customers, investors) - a "corporate hat." When this is not understood and appreciated, executive team members come only from their "silo" perspectives, feed conflict and a "my turf" mentality. The effect is no real executive team.

4. Weak closure and decision-making process. A founder recently said, "If as an executive team we were more functional we would collaborate on the issues and come to a consensus. If we had confidence in our decision-making process, we would respect rather than subvert the ones we do make".

5. Driving each other crazy. Conflict, lack of mutual respect and deference among executives as leader-managers. They may like each other but don't respect and defer to each other in their leader-manager roles. I hear a lot of, "He's a great visionary and a good entrepreneur but I can't respect him as our chief executive."

6. Too little honest feedback including regular performance reviews between the founder and executives. Founders need it and so do executive team members. CEO-founders are often like the emperor with no clothes. Everyone knows, but no one is willing to be honest.

7. Too few fully qualified leader-managers with no apparent way to change the situation. Inexperienced leader-manager-entrepreneurs in one or more key roles lack the ability to take their team to the next level.

8. Overdependence issues. Revenue related over-dependence includes reliance on too few customers, too few leads, too few prospects, too few solutions and services. Founder related over-dependence is a "Catch 22,"the company cannot survive without him and cannot succeed with him in the CEO role.

9. Poor use of time. Leader-manager imbalances include overemphasis on reaction versus pro-action; analysis over synthesis; trivial matters over the vital few. Founders completely wrapped up in fund raising at the expense of guiding team leaders.

10. Mixed signals and other inconsistencies. Entrepreneur is moody. Theme of the day follows mood of the day and conflicts with constancy of vision purpose and mission.

11. Too little guidance. As one young manager said, "We need less supervision and more guidance." We cannot give to others what we do not have ourselves. Much of what leader-managers in these companies need, founders do have, but fail to provide. A coaching approach to leading and managing, teaching and learning is what is needed.

12. Not managing by the numbers or managing only by the numbers. Numbers can define some things that are important and without measurement will be missed. Numbers don't define everything that is important.

13. No "engineered" business model. Vision remains an intangible mental construct in the founders' head. It is not shaped, designed and engineered into a tangible business model, essential to its communication. Each executive leader has a different and often conflicting concept of the business model.

14. Unplanned and unmanaged customer base and sales funnel, unpredictable revenues and margins. This important subset of the business model is missing. No design or plan to communicate the vision as a preferred choice to a well-defined customer base.

15. Lack of organizational clarity. Reporting relationships are unclear, not observed. Accountabilities are not defined. Functions and process are not designed and mapped to connect and align leader-manager roles with the business model.

16. Lack of any measured performance-pay system. Salary and stock options are not a substitute for measured performance pay tied to measured quarterly results with the accountabilities for individuals and teams.

18. No strategy process to facilitate and integrate change for growth and improvement of executives, teams and the company.

The answer to the Founder's Dilemma depends on coming to grips with these symptoms and the essential underlying cause - a prevailing mind-set that conflicts with the vision.

Root Cause

The Founder's Dilemma appears to leave only a choice between two undesirable alternatives; the company can't survive without the founder and can't succeed with him. Fortunately, there is a third and better solution for founders and companies. Its requires a shift in mind-set away from a limited, closed-perception, conflict mind-set to an expanded, open to a larger vision mind-set.

The solution lies in clarifying, understanding and properly applying these two basic and necessary mind-sets.

The conflict mind-set is essential to doing things, i.e. engineering and managing things. The vision mind-set is about identity, i.e. being who you really are in leading and working with people.

Breakthrough

Here is some advice to those who want to ditch this limiting, debilitating syndrome. It is a road map that offers a real choice and will avert, check and resolve the dilemma.

1. Acknowledge the problem. If the vision is limited by conditions identified above, simply admit it. Owning up is one big step toward changing the ball game.

2. Don't accept unacceptable performance. Remember the old maxim: We get what we accept. Effective CEOs and other effective leader-managers do not tolerate poor performance - from themselves or from others. The founder must lead by example.

3. Value honest communication. Create feedback systems and make them a part of your culture. Our blind spots are plainly visible to others, but we can only change that of which we are aware. Communication and feedback is key. The best way to make others want our feedback is to be open to theirs.

4. Shift to a new, truer vision mind-set. It will assure the values and perception that integrate rather than conflict with the business vision and its execution. Mind-set is the root cause of perception, thinking, behavior and action. It controls our perspective. Use a simple mnemonic to reinforce a powerful perspective and paradigm for designing and building your high potential company. It is V-I-P. It stands for Vision - Implementation - Passion; a very strategic yet overlooked cycle.

5. Obtain outside, objective help and use it. Resolving Founder's Dilemma requires experienced objective feedback and guidance that is usually not available from within the company. If it were available and utilized, there would be no dilemma.

6. Redefine your idea of success to include and value a balanced life.

7. Share in CEO related functions with the executive team.

Mind-sets also impact external conditions that are beyond the direct control of even the most ardent founder-CEOs. Weak market conditions, a downturn in the economy and what seems like bad luck--will a shift in perception help here, too? Minds that are in a state of fear, conflict and confusion are not successful. However, minds that are clear, confident, cohesive and consistent - free of excessive fear and conflict - are much more likely to succeed in influencing and dealing with uncontrollable factors.

Summary

Within many emerging technology companies in the Founder's Dilemma syndrome needlessly festers at great cost to everyone involved. Unchecked or unresolved it soon becomes critical, then deadly.

To resolve Founder's Dilemma requires a shift in thinking which is not an easy one. It may be the most challenging shift that a founder will ever make. However, it is doable. A bold commitment to make this transition has a great payback and should be encouraged.

Founders who succeed well beyond start-up can attribute their success significantly to the CEO role. Either they hire successfully or develop the skills and mind-set to do it themselves. Those who stumble or fail often do so because they fail to provide their companies with CEO level direction and guidance. Either they did not hire successfully or they did not grow as CEOs.

When treated effectively with practical systematic care, these conditions largely melt away. However, it takes a visionary founder willing to improve as CEO and an objective partner, usually an outside, experienced professional.

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Gordon's short blurb

I am a 50 year old executive who for the last 30 years has worked in the Hi tech sector ...I have seen the demise of the 64KDRAM..in fact I used to make them...I have seen the cloning of a sheep.... I have worked with multi cultural companies on 5 off the 6 continents .. would love to live on Oz and I could learn to play the didgeridoo...I understand that this ball off mud we live on is one great place... that life is for living... for enjoying...and that we all need a purpose in life...what’s yours ?
Gordon
Skype:whyte63sco
P.S I am an MB type ENTJ what’s yours ?